Sourcing Advisory

Engineering Services Outsourcing: The Next Frontier in Global Sourcing

Dr. Pradeep K. Mukherji
Dec 2011

Engineering Services is an exciting new offshore outsourcing opportunity, especially for India. The market is expected to grow ~40% over the next 5 years, based on demand patterns, but increasing resource constraints need to be addressed quickly through privately funded education and training programs.

Global sourcing for services remains a dynamic, and fast evolving, area of strategic business activity. Over the last few years, the basic business model – offshore outsourcing of simple, stable and repetitive tasks, primarily designed to save cost of labor – has seen a transformation to where complex, intellectual capital intensive functions can be effectively outsourced. This, the third wave in the evolution of offshore outsourcing (after IT Services and BPO), is broadly termed Knowledge Process Outsourcing, or KPO.

Within the KPO umbrella, a key area gaining attention and interest among Global 2000 enterprises is Engineering Services Outsourcing (ESO), where a significant part of the core IP development activities in Industrial sector companies is outsourced to specialized offshore vendors with highly skilled resources.

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